A team from Jamnalal Bajaj Institute of Management Studies (JBIMS) has recommended that warehouse receipt financing,where securely stored goods are used as loan collateral,be implemented at the grassroot level across India to help small farmers struggling to repay their debt. Warehousing is a western concept and though it was introduced in India by RBI several years ago,it exists at few places for big farmers only. Simultaneously,while the agricultural sector has increased manifold,storage facilities have not increased proportionately,resulting in massive wastage. We have estimated that Rs 60,000 crore is lost annually due to this, said Pankaj Patil,JBIMS team leader for the project titled Sanjivani. The project is part of JBIMSs annual business convention,Strategym. Weve proposed a model based on warehouse receipt financing and agriculture-commodity trading on a grass root level. It will enable farmers to get loans by keeping their produce as collateral,thereby reducing their dependence on local money-lenders. Warehouse receipt is a negotiable financial instrument for which the underlying asset is the agri-produce. The loan would be flexible,allowing farmers to spend it to finance expansion activities and pay off debts, he said. Larsen and Toubro (L&T) Finance Limited has signed an agreement with JBIMS and will implement the project in Maharashtra. According to the proposal,micro-finance institutions which have a wider network across the country,should be involved. Cooperative societies,it says,can be formed in rural areas where 75 per cent of the subsidy comes from the government. These societies will help set up warehouses and cold storage facilities. A similar model is running successfully in Nasik, said Patil. It moots agri-commodity trading through an online platform where farmers can sell their produce,through the electronic network linking the countries exchanges. Low-income housing model in pipeline A group,which is looking at low-income housing (LIH) for Mumbai,is in talks with developers to create an affordable housing model (houses priced at Rs 3-10 lakh per unit) that can be used for city planning and decongestion. Low income customers live in poorly constructed houses with deplorable sanitary conditions. We propose earmarking areas for them where the government can help private developers in land acquisition. These areas can be called special residential zones, said Harshul Savla,team leader for the project. The team has proposed single window clearance by the government and a website is being planned to showcase its feasibility. We are consulting Neptune Builders who entered this market recently. Weve mooted using technology to complete construction in a year. For this,we are in talks with a German company, he said.
